Tips to Buying a Home with a VA Loan

Dev.Caldwell

If you are active or retired in the military or reserves, getting a home loan using a VA loan might be the way to go for you. They are a home loan program that is backed by the federal government to specifically help military personnel just like you. Take a look at the many excellent features of VA home loans. Find out who qualifies and how to prove that you are eligible. Then review the few considerations to be aware of before you decide to use one!

Exceptional Benefits of VA Loans

Veteran’s Administration (VA) home loans were set up to help make buying a home easier for military personnel. The main benefits are:

  • No limits on the amount you can finance
  • No PMI
  • Low-interest rates
  • Limits on closing costs

Coming up with a down payment for your home is often a difficult problem for many people. Using a VA home loan, you can finance up to 100% of the amount of the house. With a traditional loan, that simply isn’t possible. You would have to have a down payment, and if you didn’t put down a minimum of 20% of the total, you would most likely pay Private Mortgage Insurance (PMI).

PMI is mortgage insurance banks that force you to pay if you don’t put down at least 20% of the price of the home. The amount you pay is calculated based on a scale using your credit score, the amount of the loan and the amount you did put down. That can be a hefty additional payment of hundreds of dollars per month.

In addition, interest rates can be significantly lower than the national average, which will save you thousands of dollars over the lifetime of your loan. Finally, on traditional loans closing costs and fees can add up quickly, costing you a significant amount when you actually go to purchase the house. With VA loans, there are strict limits on what can be charged for closing costs.

How to Qualify for VA Loans

Essentially qualifying for a VA loan amounts to serving in the military. If you are on active duty, you are eligible after 90 days during wartime or 181 during peacetime. If you are in the Reserves or National Guard, you qualify after six years of service. If you are a spouse of someone in the military who died in the line of duty or because of a disability-related to service, you also qualify. If you meet these qualifications, you do need to get what is called a “Certificate of Eligibility,” also known as a COE. You can then take the COE to the bank you are getting the loan at to prove you qualify. Finally, you need to prove you have good credit, income, and plan to use the house you are buying as your primary residence.

Considerations About VA Loans

There are a few things to consider before choosing a VA home loan. First, VA loans are not eligible for use with vacation homes or other secondary homes that you will not be using as your primary residence. Next, the VA appraisal is more extensive than other home appraisal services may be. This can make home sellers somewhat leery of VA buyers because they may have heard a story about how the appraisal took longer. That will have to be your decision; however, a thorough home appraisal now will find any issues that will cause you problems later. Finally, there is a closing cost specific to the VA called the VA funding fee, which changes depending on how many times you use the VA loan. That fee can, however, be rolled into the mortgage itself.

VA loans are a great benefit for active and retired servicemen and women to take advantage of when they are purchasing their first home or their last! You can also use VA loans to refinance your home. Contact a lender today to learn more about VA loans and find your next dream home!

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